Copper pulls back from 20-month high

EdBallard

LONDON--Copper prices retreated on Wednesday as traders took profits after news of an imminent strike at the world's biggest copper mine pushed the price to a 20-month high.

The London Metal Exchange's three-month copper contract was down 0.5% at $5,950 a metric ton. Early in the session the market extended the gains of the previous session, briefly exceeding $6,000 a ton for the first time since June 2015, after workers voted to go on strike at the Escondida mine in Chile after rejecting a pay offer.

"Supply disruption remains front and center," said Hamza Khan, head of commodities strategy at ING Bank. "I think this is more of a profit-taking opportunity."

Union officials are widely expected to hold mediated negotiations lasting up to five days with management of the mine before going on strike.

The Escondida mine is majority-owned by BHP Billiton Ltd. Its 980,000 tons of copper production in 2016 accounted for 5% of global output, according to Commerzbank.

Analysts have predicted a rise in compensation disputes this year as higher prices spur workers to push for better pay when their existing contracts expire.

Mr. Khan said he expects uncertainty over the resolution of the dispute at Escondida, and the possibility of "solidarity strikes" elsewhere, to sustain prices "at the $6,000 level" for now.

A slightly stronger dollar was also weighing on prices, making dollar-denominated commodities pricier for holders of other currencies. The WSJ Dollar Index was up 0.1% at 90.56.

Most other industrial metals traded lower. Aluminium was down 0.5% at $1,812 a ton, lead fell 1% to $2,388.50 a ton, tin edged down 0.1% to $19.870 and zinc shed 0.5% to $2,851.50 a ton. Nickel rose 0.7% to $10,035 a ton.

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